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2015 Second Quarter Earnings
Conference Call
Date: Thursday, August 25th, 2015.
Time: 3:00 pm (UTC-05:00) Bogota
Web page: www.terpel.com
Bonds AAA (col) Fitch's Rating
Shares BVC: TPL
Press release
August 2015
TERPEL LAUNCHED AN UNIQUE EXPERIENCE FOR MOTORCYCLISTS It is the disruptive and modern design motorbike pump facilities inspired by the GP races. With state of
the art pumps, exclusively for motorcyclists, we are able to simultaneously supply fuel to four
motorcycles, Terpel has begun to offer this differentiated experience to the more than 5 million
motorcyclist in Colombia. A portfolio of products such as Terpel Celerity lubricants and motorbike’s
accessories, enrich this unique offer in the market. It will be available in 10 service station in major cities
by the end of the year.
“Terpel constantly reinvents itself and works for people. Given the rapid growth of motorcycles in
the country we have decided to create a memorable and unique experience for motorcyclists, which respond to their
needs and desires. We would like to surprise them, to build loyalty and to serve them in the best way«. Sylvia Escovar, Terpel CEO
TERPEL RECEIVED ANDESCO’S AWARD TO THE BEST CORPORATE GOVERNMENT
ENVIRONMENT The award was granted during the 17th Andesco Congress of Public Services, Communications, TIC and TV.
This recognition highlights Terpel efforts in government, ethic and transparency supported by its
policies in sustainability and corporate social responsibility.
WHOLESALER’S MARGIN GREW BY 4,64% As of the first of June 2015, according to Resolution 90675 of 2014, the wholesale regulated margin
increased by 4,64% up to COP$ 341,54.
TERPEL’S SHARE PRICE ROSE BY 3,7% SINCE AUGUST 2014 In August 2014 Terpel’s share had an opening price of COP$14.760. At the end of 2Q15 the price rose to
COP$15.300, an increase of 3,7%. Terpel’s Market Capitalization is around COP$2,8 trillion.
Terpel has broad experience in the distribution of liquid fuels and lubricants
under the Terpel brand and Vehicular Natural Gas (VNG) under the Gazel
brand. The company has strong presence in Colombia, Ecuador, Panama,
Peru, Mexico and Dominican Republic through its service stations (SS)
network and industrial, aviation and marine customers.
Second Quarter Highlights
Investors Contact:
During 2Q15 549 million gallons were sold, an
increase of 2,9% compared to 2Q14. The
accumulated volume grew by 1,6% to 1.089
million gallons. Colombia’s share in consolidated
volume was 80,8% and when compared to first
semester 2014 Colombia’s volume grew by
3,8%. Meanwhile, Panamá which accounted for
8,9% of consolidated volume, decreased by
17,9% due to a lower demand from electricity
generation customers. Ecuador, Peru, Mexico
and Dominican Republic all together accounted
for 10% of consolidated volume and showed an
increase of 5,7%.
Despite of the volume growth, COP$3,4 trillion
revenues of the 2Q15 declined by 0,5% when
compared to the 2Q14. First semester revenues
slowed down by 6% to COP$6,7 trillion.
Colombia’s revenue, which is the 85,3% of
consolidated income, had a contraction of 4,7%.
In regard to the 8,6% of consolidated revenue
which is comprised by Panama, its decrease was
28,3%, as a consequence of the decline in
international fuel prices.
2Q15 Gross profit was COP$313 billion, 17,1%
more than 2Q14. Despite the negative COP$23
billion impact of inventory loss during the first 6
months of the year, the accumulated gross profit
was COP$571,5 billion, a growth of 5,3%.
Colombia (76,6% of consolidated gross profit)
dropped by 0,6% whereas Panama (13,4% of
consolidated gross profit) rose by 14,5%. Other
countries, that accounted for 10% of
consolidated gross profit, had an increase of
46%.
2Q15 EBITDA improved 18,4% when compared
to 2Q14 EBITDA. Nevertheless, the inventories
loss in Colombia and Panamá, and the lower
volume in Panamá caused a decrease of 7% in
accumulated EBITDA down to COP$254,1 billion.
In Colombia, the accumulated decrease was 9,6%
and in Panama 15,9%. Other countries (7% of
consolidated EBITDA) presented an increase of
82,7%.
2Q15 Terpel’s net profit corresponds to the
merged company results, while 2Q14 does not
include figures of Proenergía, SIE and Terpel
Centro. 2Q15 net profit was COP$44,3 billion,
28,9% over 2Q14 net profit. The decrease in
accumulated net profit was 41,1% to COP$49,5
billion. This is partly due to SIE´s debt financial
expenses incorporated after the merger process
and COP$10,7 billion of 2015´s equity tax.
2
Ownership Structure
Financial Results - Summary
CONSOLIDATED RESULTS 2Q15 1Q15 2Q142Q15 Vs.
2Q14YTD 15 YTD 14
YTD 15 Vs.
YTD 14
Volume (millon Glns) 549,0 540,3 533,7 2,9% 1.089,3 1.071,9 1,6%
Revenues ($COP Billion) 3.424,7$ 3.300,3$ 3.442,0$ -0,5% 6.724,9$ 7.155,0$ -6,0%
Gross Profit ($COP Billion) 313,0$ 258,5$ 267,3$ 17,1% 571,5$ 542,8$ 5,3%
EBITDA ($COP Billion) 150,8$ 103,3$ 127,4$ 18,4% 254,1$ 273,2$ -7,0%
Net Profit ($COP Billion) 44,3$ 5,3$ 34,3$ 28,9% 49,5$ 84,1$ -41,1%
3
Terpel has consolidated its presence in 6
countries:
In Peru, where VNG is distributed through
the Gazel brand, the SS network has grown
from 24 SS in 2014 to 33 SS reaching 11% of
the market share. Gazel Peru is the second
VNG distribution company in that country.
Recently, Gazel Peru has begun distributing
liquid fuels and LPG.
The VNG distribution business in Mexico has
grown from a Greenfield project. In 2015 the
company remains with 7 SS under the Gazel
brand and with 100% of market share in
Mexico DF (92% in the entire country). Mexico
has a high growth potential. The goal is to
continue to position Gazel as the number one
brand.
Regional Presence
In Panama, the main business units are liquid service stations,
industrial and marine customers, complemented with the non-
oil business (convenience stores) and lubricants distribution. At
the end of 2Q15 Terpel Panama had a network of 114 SS. It
retains the second position in the market ranking with 20% of
the share.
Colombia's SS network reached 2.115 at the end of the 2Q15 comprised by 1.989
liquid fuel SS (201 are company owned) and 291 VNG SS (165 SS sale both liquid
fuel and VNG). Market share in Colombia is: 41% for liquid fuels, 46% for VNG and
78% for aviation fuel in which Terpel supplies jet fuel to customers through safe and
reliable operations in 20 airports nationwide. At the end of the quarter, Terpel
remained as the leader company in the fuel distribution industry in Colombia.
In Dominican Republic, since 2011 Terpel supplies Jet fuel to airlines
through 4 of the major airports where it has safe and reliable operations.
Market share in Dominican Republic for the first quarter is around 40%.
In June 2015, Ecuador’s network is comprised by 57 stations and its
market share is 6%. Terpel Ecuador is number 5 in the market share
ranking.
No. No. Ranking% Market
Share*
Business
Lines
7 -- 1 92%** (VNG)
-- 4 2 40%
114 -- 2 20%
41% COMB
46% VNG
78% Aviation
57 -- 5 6%
33 -- 2 11% (VNG)
12.115*** 20
4
Consolidated Operational Results
During first semester 2014 Terpel sold 1.072
million gallons. At the end of same period in 2015
the company reached 1.089 million gallons. This
is an increase of 1,6%.
Colombia recorded 80,8% of consolidated volume
and its growth was 3,8% in first semester 2015.
The second largest country in terms of volume
sales is Panama with 8,9%. Panama´s volume
decreased 17,9% as a result of the lower demand
from electricity generation clients in that country.
Ecuador added 6,2% to the consolidated volume
sales. Its growth was around 3,7% compared to
2014. In Dominican Republic the volume sales
accounted for 2,5% of the consolidated volume
and its growth rate was 8,4%.
Although Peru and México contribute less than
1% each one to consolidated volume, their growth
was 13,4% and 3,9% respectively.
Consolidated EBITDA decreased 7%, from COP$273
billion in 2014 to COP$254 billion in 2015 mainly
due to inventories losses which amounted to
COP$23 billions (COP$ 17 billions in Colombia).
Also in Colombia the company had lower gross
margins in lubricants and VNG business units as
well as lower volume in industry and VNG.
Colombia weights 83,5% in the consolidated
EBITDA. EBITDA in Colombia for 2015 decreased
COP$22,6 billion, -9,6% over 2014.
Panama’s EBITDA had a period to period decrease
of 15,9%, which is a COP$4,6 billion contraction
due to on the one hand the inventory loss (COP$5
billion loss) as a consequence of international oil
prices drop and on the other hand to industry
business unit lower volumes compared to 2014.
Panama weighted 9,5% in the consolidated EBITDA.
Mexico showed a COP$5,1 billion EBITDA,
COP$4,4 billion higher than the one in 2014
thanks to higher volumes and gross margins.
Finally Peru, Ecuador and Dominican Republic
contributed to consolidated EBITDA with
approximately COP$12,7 billion and had
significant volume growths.
5
Colombia Operational Results
Financial results in Colombia have been positively influenced by the implementation of the new business
strategy that outweighs high service standards, state of the art infrastructure and low prices. Service
Stations have a totally new design and image, excellent restrooms, innovative convenience stores and
unique car washing facilities.
Colombia’s volume increased by 3,8% in 2015 to
880,2 million. 65,7% of total volume was distributed
through liquid fuels service stations and 6,3% through
VNG service stations. In total, service stations
business as a whole represent approximately 72,1% of
total volume sales in Colombia. Consistently, capital
investments are mainly focused on liquid fuel service
stations image and infrastructure that are considered
to be essential for the differentiation target.
Contribution of aviation fuel sales in Colombia´s total
volume was 17,6% and had a 20,5% growth over
2014. Industry volume accounted for 9,5% and had a
24,9% drop due to customers that started to be
served by Ecopetrol as well as oil and gas E&P
companies production downturn.
Although lubricant’s volume weights less than 0,5%, it
is the second largest segment (after SS) in terms of
gross profit as a result of its significantly higher gross
margins. While service station, both liquid and VNG,
account for 75,7% of the total gross profit in
Colombia with 72,1% of the volume sales, lubricants
business unit represents 7,4% of the total gross profit
with 0,4% of the volume sales.
Gross profit in Colombia for the first semester
reached COP$437,8 billion, a fall of 0,6% when
compared to 2014. This is explained by inventory loss
as well as lower gross margins in lubricants and VNG
and lower volume sales in industry and VNG business
unit.
Industry and aviation contributed with 4,8% and
7,7% respectively to Colombia’s gross profit.
Contribution of marine and complementary services
is currently not very significant due the fact that they
are at an initial deployment stage, however, these are
business units that have great growth potential.
Altoque Conv, Store SS Báscula (Bogotá, Colombia) Deuna SS La América (Medellín, Colombia) Ziclos SS Autopista (Cali, Colombia) Restrooms SS Báscula (Bogotá, Colombia)
6
Colombia Operational Results
9,6% decrease in Colombia’s EBITDA and 3,8%
volume growth. Lower gross margins in lubricants
and VNG business units when compared to 2014
along with inventory loss generated by gasoline
price change, explain the EBITDA per gallon fall
from COP$277 in 2014 to COP$242 in 2015.
41,1% decrease from COP$84 billion net profit
in 2014 was partly explained by SIE’s debt
financial expenses that after merger process
became part of Organización Terpel´s figures, as
well as the inventory loss. Also, in 2015 there
was an equity tax charge for about COP$10,7
billion.
Consolidated assets reached COP$3,7 trillion and had an increase of 3,2% compared to 2014 due to
PP&E acquisition. Current Assets account for 34%, PP&E represent 39% and 26% are deferred assets.
In regard to liabilities, the vast majority are the bonds issued in 2013 and 2015 representing 48%,
current liabilities 28% and other financial liabilities, both short and long term 24%.
Finally, the equity book value at the first semester 2015 was COP$1,4 trillion.
Consolidated Balance Sheet
** 2014 net profit prior to merger process (neither includes
Proenergía, Terpel Centro nor SIE financial results).
* Colombia neither includes royalties income nor equity tax
for COP$10,7 billion
$COP Million* jun-14 jun-15
Assets $ 3.568.907 $ 3.681.876
Financial Debt $ 1.164.569 $ 1.397.298
Other Liabilities $ 938.475 $ 889.953
Equity** $ 1.465.863 $ 1.394.625
* Jun-2014 Fiancial Statements prior to the merger process.
** Equity includes minority interest
7
Consolidated Financial debt
The total debt as of June 2015 amounted to COP$1,4 trillion and is
comprised mainly by loans in Colombia, Panama, Peru and Mexico. In
2014 consolidated debt (SIE included) was COP$1,3 trillion. In Colombia
(Org. Terpel), bonds issued in 2013 and 2015 amount to COP$1,1 trillion.
The remaining debt in Colombia corresponds to leasing contracts.
Peru’s debt and the 7 year maturity tranch of Colombian bonds issued in
2013, represent the 19% fixed cost debt.
The Libor rate liabilities (13%) are financial loans of Panama, while the
TIIE linked portion is composed by Mexico debt (4%).
3% of consolidated debt is short-term and is comprised by Panama and Peru loans. On the other hand,
the 97% long-term debt has maturity dates in 2018 with COP$177 billion, in 2020 with COP$241
billion, 2022 with COP$151 billion, 2023 with COP$247 billion, 2030 with COP$249 billion and 2031
with COP$97 billion. Moreover, outflows expected in those coming years are mainly principal payments
of the bonds issued in 2013 and 2015. In 2017 Panama's liabilities will expire, Mexico’s debt has been
refinanced until 2018 and Peru´s debt will be paid by 2020.
In regard to the financial debt ratios, the consolidated debt level recorded in 2015 was 2,8 times the
EBITDA and the EBITDA was 6,9 times higher than the debt financial expenses.
The consolidated cash balance as of June 2015 was COP$174 billion.
* COP$65 billion increase over 2014 mainly as a result of exchange rate variation.
$COP Billion jun-15jun-14
$ 1.141
$ 1.403
$ -
$ 184
$ 57
$ 21
$ -
$ 955
$ 1.338
$ 12
$ 145
$ 48
$ 8
$ 169
Org. Terpel
Terpel Combustibles
Panamá PNSA
México CEM
Gazel Perú
SIE
Consolidated Debt
8
Consolidated CAPEX
Terpel Share
The strategy that The Company is implementing requires an important amount of capital investments in
order to achieve the desired SS´s and Conveniences Stores' infrastructure and design standards. This
higher average CAPEX, when compared to historical years, is enabling Terpel to differentiate itself from
its competitors and increase customer's loyalty in the coming years.
COP$178 billion CAPEX in 2015, was invested mainly in the incorporation of new company owned and
affiliate SS to the network, refurbishment of existing SS as well as the building of new convenience
stores, car wash services (Ziclos) and operational investments needed in storage plants.
70,2% of these investments were made in Colombia and 26,4% were allocated Mexico and Panama for
their expansion plan. In consistency with the strategy, 79,4% of the investments are undertaken in the
SS network, either in infrastructure, vehicle conversions to VNG or building of complementary services
facilities. The CAPEX invested in storage and fuel supply facilities accounted for 9,7% since storage
capacity is key to continue strengthening the logistic value chain regarding product delivery and thus
customer satisfaction.
In 2014, Terpel´s stock had an opening price of COP$14.760 and at the end of first semester 2015 the
close price was COP$15.300, an increase of 3,7%. The volume traded at the end of June 2015 was
COP$320 billion in 18,5 million transactions.
At the end of the semester Terpel’s market capitalization was COP$2,8 trillion which is 2 times equity
book value.
Consolidated Operational Results
9
Considerations on the financial and operational information
The financial and operating results presented in this document correspond to Organización Terpel and its subsidiaries according to
International Financial Reporting Standards (IFRS). The individual results of the subsidiaries are reported including intercompany
eliminations, therefore, the sum of individual results may not correspond to the consolidated results.
Given the merger process, conducted in August 2014, the Consolidated Financial Statements prior to that date do not include
Sociedad de Inversiones en Energía (SIE). In that sense, by June 2014 Consolidated Financial Statements must be taken from
Sociedad de Inversiones en Energía to make it comparable to the merged consolidated Terpel´s figures.
The information contained in this document does not commit nor suggest any investment decision.
CONSOLIDATED RESULTS 2Q15 1Q15 2Q142Q15 Vs.
2Q14YTD 15 YTD 14
YTD 15 Vs.
YTD 14
Volume (millon Glns) 549,0 540,3 533,7 2,9% 1.089,3 1.071,9 1,6%
Colombia 445,3 434,9 424,8 4,8% 880,2 847,9 3,8%
Panama 48,5 47,9 55,8 -13,2% 96,4 117,4 -17,9%
Ecuador 34,2 33,6 33,5 2,2% 67,9 65,4 3,7%
Peru 5,7 5,2 5,0 15,1% 10,9 9,7 13,4%
Mexico 3,4 3,3 2,8 20,3% 6,7 6,4 3,9%
Rep. Dominicana 11,9 15,2 11,9 0,2% 27,2 25,1 8,4%
Revenues ($COP Billion) 3.424,7$ 3.300,3$ 3.442,0$ -0,5% 6.724,9$ 7.155,0$ -6,0%
Colombia 2.916,5$ 2.822,6$ 2.926,6$ -0,3% 5.739,1$ 6.024,1$ -4,7%
Panama 307,6$ 269,6$ 384,2$ -19,9% 577,2$ 804,6$ -28,3%
Ecuador 91,9$ 89,3$ 70,0$ 31,4% 181,2$ 140,1$ 29,3%
Peru 18,5$ 15,0$ 11,2$ 65,3% 33,5$ 22,4$ 49,3%
Mexico 11,1$ 11,5$ 8,6$ 29,6% 22,6$ 18,7$ 20,9%
Rep. Dominicana 78,9$ 92,4$ 89,2$ -11,5% 171,4$ 188,4$ -9,1%
Gross Profit ($COP Billion) 313,0$ 258,5$ 267,3$ 17,1% 571,5$ 542,8$ 5,3%
Colombia 241,7$ 196,0$ 216,8$ 11,5% 438$ 441$ -0,6%
Panama 41,9$ 34,9$ 34,1$ 22,7% 76,8$ 67,1$ 14,5%
Ecuador 3,9$ 3,8$ 3,0$ 29,7% 7,7$ 6,0$ 27,4%
Peru 7,1$ 6,2$ 7,1$ -0,5% 13,3$ 10,3$ 28,8%
Mexico 7,3$ 7,1$ 4,1$ 79,7% 14,5$ 8,7$ 66,3%
Rep. Dominicana 11,1$ 10,4$ 6,4$ 72,6% 21,5$ 14,0$ 54,2%
EBITDA ($COP Billion) 150,8$ 103,3$ 127,4$ 18,4% 254,1$ 273,2$ -7,0%
Colombia 126,5$ 85,7$ 108,7$ 16,5% 212,3$ 234,9$ -9,6%
Panama 15,2$ 8,9$ 13,9$ 9,1% 24,0$ 28,6$ -15,9%
Ecuador 1,9$ 1,8$ 1,3$ 41,9% 3,7$ 2,7$ 33,7%
Peru 1,1$ 1,2$ 1,2$ -4,8% 2,4$ 2,4$ 0,3%
Mexico 2,5$ 2,6$ 0,5$ 390,8% 5,1$ 0,7$ 602,4%
Rep. Dominicana 3,5$ 3,2$ 1,8$ 99,3% 6,7$ 3,9$ 69,9%